Selected Recent Virginia and Fourth Circuit Decisions of Interest
For information on bankruptcy and other creditors' rights issues, please contact, Robert H. Chappell, III (804) 697-2025 or any of our other Creditors' Rights, Bankruptcy and Insolvency group lawyers.
U.S. Supreme Court
Stern v. Marshall, No. 10-179, SUPREME COURT OF THE UNITED STATES, 2011 U.S. LEXIS 4791, January 18, 2011, Argued, June 23, 2011, Decided.
Article III, §1, of the Constitution mandates that "[t]he judicial Power of the United States, shall be vested in one supreme Court, and in such inferior Courts as the Congress may from time to time ordainand establish," and provides that the judges of those constitutionalcourts "shall hold their Offices during good Behaviour" and "receive for their Services[ ] a Compensation[ ] [that] shall not be diminished"during their tenure. The questions presented in this case are whether a bankruptcy court judge who did not enjoy such tenure andsalary protections had the authority under 28 U. S. C. §157 and Article III to enter final judgment on a counterclaim filed by Vickie Lynn Marshall (whose estate is the petitioner) against Pierce Marshall (whose estate is the respondent) in Vickie's bankruptcy proceedings.
Ransom v. Fia Card Servs., 2011 U.S. LEXIS 608 (U.S. 2011)
Chapter 13 of the Bankruptcy Code uses a statutory formula known as the "means test" to help ensure that debtors who can pay creditors do pay them. The means test instructs a debtor to determine his "disposable income" -- the amount he has available to reimburse creditors -- by deducting from his current monthly income "amounts reasonably necessary to be expended" for, inter alia, "maintenance or support." 11 U.S.C. § 1325(b)(2)(A)(i). For a debtor whose income is above the median for his State, the means test indentifies which expenses qualify as "amounts reasonably necessary to be expended." As relevant here, the statute provides that "[t]he debtor's monthly expenses shall be the debtor's applicable monthly expense amounts specified under the National Standards and Local Standards, and the debtor's actual monthly expenses for the categories specified as Other Necessary Expenses issued by the Internal Revenue Service [IRS] for the area in which the debtor resides." § 707(b)(2)(A)(ii)(I).
The Standards are tables listing standardized expense amounts for basic necessities, which [*2] the IRS prepares to help calculate taxpayers' ability to pay overdue taxes. The IRS also creates supplemental guidelines known as the "Collection Financial Standards," which describe how to use the tables and what the amounts listed in them mean. The Local Standards include an allowance for transportation expenses, divided into vehicle "Ownership Costs" and vehicle "Operating Costs." The Collection Financial Standards explain that "Ownership Costs" cover monthly loan or lease payments on an automobile; the expense amounts listed are based on nationwide car financing data. The Collection Financial Standards further state that a taxpayer who has no car payment may not claim an allowance for ownership costs.
When petitioner Ransom filed for Chapter 13 bankruptcy relief, he listed respondent (FIA) as an unsecured creditor. Among his assets, Ransom reported a car that he owns free of any debt. In determining his monthly expenses, he nonetheless claimed a car-ownership deduction of $ 471, the full amount specified in the "Ownership Costs" table, as well as a separate $ 388 deduction for car-operating costs. Based on his means-test calculations, Ransom proposed a bankruptcy plan that would [*3] result in repayment of approximately 25% of his unsecured debt. FIA objected on the ground that the plan did not direct all of Ransom's disposable income to unsecured creditors. FIA contended that Ransom should not have claimed the car-ownership allowance because he does not make loan or lease payments on his car. Agreeing, the Bankruptcy Court denied confirmation of the plan. The Ninth Circuit Bankruptcy Appellate Panel and the Ninth Circuit affirmed.
Held: A debtor who does not make loan or lease payments may not take the car-ownership deduction.
Milavetz, Gallop & Milavetz, P.A. v. United States, 2010 U.S. LEXIS 2206 (U.S. Mar. 8, 2010)
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) amended the Bankruptcy Code to define a class of bankruptcy professionals termed "debt relief agenc[ies]." 11 U.S.C. § 101(12A). That class includes, with limited exceptions, "any person who provides any bankruptcy assistance to an assisted person . . . for . . . payment . . . , or who is a bankruptcy petition preparer." Ibid. The BAPCPA prohibits such professionals from "advis[ing] an assisted person . . . to incur more debt in contemplation of [filing for bankruptcy] . . . ." § 526(a)(4). It also requires them to disclose in their advertisements for certain services that the services are with respect to or may involve bankruptcy relief, §§ 528(a)(3), (b)(2)(A), and to identify themselves as debt relief agencies, §§ 528(a)(4), (b)(2)(B).
The plaintiffs in this litigation -- a law firm and others (collectively Milavetz) -- filed a preenforcement suit seeking declaratory relief, arguing that Milavetz is not bound by the BAPCPA's debt-relief-agency provisions and therefore [*2] can freely advise clients to incur additional debt and need not make the requisite disclosures in its advertisements. The District Court found that "debt relief agency" does not include attorneys and that §§ 526 and 528 are unconstitutional as applied to that class of professionals. The Eighth Circuit affirmed in part and reversed in part, rejecting the District Court's conclusion that attorneys are not "debt relief agenc[ies]"; upholding application of § 528's disclosure requirements to attorneys; and finding § 526(a)(4) unconstitutional because it broadly prohibits debt relief agencies from advising assisted persons to incur any additional debt in contemplation of bankruptcy even when the advice constitutes prudent prebankruptcy planning.
Held:
- Attorneys who provide bankruptcy assistance to assisted persons are debt relief agencies under the BAPCPA. By definition, "bankruptcy assistance" includes several services commonly performed by attorneys, e.g., providing "advice, counsel, [or] document preparation," § 101(4A). Moreover, in enumerating specific exceptions to the debt-relief-agency definition, Congress indicated no intent to exclude attorneys. See §§ 101(12A)(A)-(E). Milavetz [*3] relies on the fact that § 101(12A) does not expressly include attorneys in advocating a narrower understanding. On that reading, only a bankruptcy petition preparer would qualify -- an implausibility given that a "debt relief agency" is "any person who provides any bankruptcy assistance . . . or who is a bankruptcy petition preparer," ibid. Milavetz's other arguments for excluding attorneys are also unpersuasive. Pp. 5-9.
- Section 526(a)(4) prohibits a debt relief agency only from advising a debtor to incur more debt because the debtor is filing for bankruptcy, rather than for a valid purpose. The statute's language, together with its purpose, makes a narrow reading of § 526(a)(4) the natural one. Conrad, Rubin & Lesser v. Pender, 289 U.S. 472, 53 S. Ct. 703, 77 L. Ed. 1327, supports this conclusion. The Court in that case read now-repealed § 96(d), which authorized reexamination of a debtor's attorney's fees payment "in contemplation of the filing of a petition," to require that the portended bankruptcy have "induce[d]" the transfer at issue, id., at 477, 53 S. Ct. 703, 77 L. Ed. 1327, understanding inducement to engender suspicion of abuse. The Court identified the "controlling question" as "whether the thought of bankruptcy was the impelling [*4] cause of the transaction," ibid. Given the substantial similarities between §§ 96(d) and 526(a)(4), the controlling question under the latter is likewise whether the impelling reason for "advis[ing] an assisted person . . . to incur more debt" was the prospect of filing for bankruptcy. In practice, advice impelled by the prospect of filing will generally consist of advice to "load up" on debt with the expectation of obtaining its discharge. The statutory context supports the conclusion that § 526(a)(4)'s prohibition primarily targets this type of conduct. The Court rejects Milavetz's arguments for a more expansive view of § 526(a)(4) and its claim that the provision, narrowly construed, is impermissibly vague. Pp. 9-18.
- Section 528's disclosure requirements are valid as applied to Milavetz. Consistent with Milavetz's characterization, the Court presumes that this is an as-applied challenge. Because § 528 is directed at misleading commercial speech and imposes only a disclosure requirement rather than an affirmative limitation on speech, the less exacting scrutiny set out in Zauderer v. Office of Disciplinary Counsel of Supreme Court of Ohio, 471 U.S. 626, 105 S. Ct. 2265, 85 L. Ed. 2d 652, 17 Ohio B. 315, governs. There, the Court [*5] found that, while unjustified or unduly burdensome disclosure requirements offend the First Amendment, "an advertiser's rights are adequately protected as long as disclosure requirements are reasonably related to the State's interest in preventing deception of consumers." Id., at 651, 105 S. Ct. 2265, 85 L. Ed. 2d 652, 17 Ohio B. 315. Section 528's requirements share the essential features of the rule challenged in Zauderer. The disclosures are intended to combat the problem of inherently misleading commercial advertisements, and they entail only an accurate statement of the advertiser's legal status and the character of the assistance provided. Moreover, they do not prevent debt relief agencies from conveying any additional information through their advertisements. In re R. M. J., 455 U.S. 191, 102 S. Ct. 929, 71 L. Ed. 2d 64, distinguished. Because § 528's requirements are "reasonably related" to the Government's interest in preventing consumer deception, the Court upholds those provisions as applied to Milavetz. Pp. 18-23.
541 F.3d 785, affirmed in part, reversed in part, and remanded.
U.S. Court of Appeals for the Fourth Circuit
Botkin v. Dupont Cmty. Credit Union, 2011 U.S. App LEXIS 11974 (4th Cir. Va. 2011)
DuPont Community Credit Union appeals a district court order reversing a bankruptcy court order ruling that the debtor could not avoid a judicial lien on her property since she had not claimed an exemption in the property. Finding no error, we affirm the district court.
Horvath v. Bank of New York, 2011 U.S. App. LEXIS 10152 (4th Cir. Va. 2011)
In a victory for the lending industry, the Richmond-based U.S. Court of Appeals for the Fourth Circuit issued an opinion on May 19, 2011 (Horvath v. Bank of New York, Docket No. 10-1528) affirming the dismissal of a lawsuit filed by a homeowner seeking to invalidate the August, 2009 foreclosure on his home in Prince William County, Virginia, in essence, because the loan had been securitized. The homeowner alleged that the securitization process and related assignment of the obligations operated to sever the relationship between the Note and the Deed of Trust, thereby barring enforcement of the Deed of Trust through foreclosure by any entity other than the original lender under the loan documents. Numerous similar suits have been filed around the state and country and this decision should provide support for the industry's position in other jurisdictions as well.
In addition to the above contention, the homeowner made other arguments that were also rejected by the Court. More details related to the background and ruling in this case will be forthcoming in later newsletters.
Calhoun v. United States, 2011 U.S. App. LEXIS 9037 (4th Cir. S.C. 2011)
LEXIS - OVERVIEW: The debtors' fixed income, excluding the husband's Social Security benefits, was $7,313 per month or $87,756 per year--well above the $46,521 median income for a household of two in South Carolina. Including the Social Security benefits, their average monthly income was $8,772. The total of all of their monthly deductions allowed under the means test was $7,330.19. Their expenses, when subtracted from their income, left a monthly net income that was insufficient to trigger a presumption of abuse under 11 U.S.C.S. § 707(b)(2). However, the bankruptcy court proceeded under § 707(b)(3) and concluded that the totality of the debtors' financial situation evidenced an abuse of Chapter 7. The bankruptcy court found a multitude of factors weighing in favor of abuse, and there was no error in those findings. Contrary to the debtors' argument, the means test was not conclusive of eligibility for Chapter 7 relief.
OUTCOME: The judgment of the district court was affirmed.
Maryland v. Ciotti (In re Ciotti), 2011 U.S. App. LEXIS 4492 (4th Cir. Md. Mar. 8, 2011)
Debtor appeals a district court order reversing a bankruptcy order declaring that her Maryland state income tax liability for the tax years 1992-1996 had been discharged in bankruptcy. Finding no error, we affirm.
Nickey Gregory Co., LLC v. AgriCap, LLC, 2010 U.S. App. LEXIS 4587 (4th Cir. S.C. Mar. 4, 2010)
From Opinion:
Two sellers of perishable agricultural commodities, Nickey Gregory Company, LLC, and Poppell's Produce Inc., commenced this action under the Perishable Agricultural [*2] Commodities Act, 1930 ("PACA"), 7 U.S.C. §§ 499a-499t, to recover $ 106,696 owed them for the sale of produce to Robison Farms, LLC., a bankrupt South Carolina produce distributor. They named as defendant AgriCap, LLC, a finance company that provided secured financing to Robison Farms for working capital, and they demanded that AgriCap disgorge the proceeds of Robison Farms' accounts receivable held by AgriCap as collateral to secure repayment of monies advanced by AgriCap to Robison Farms. The two produce sellers claim that 7 U.S.C. § 499e(c)(2) created a trust for their benefit over the proceeds of their produce, including the accounts receivable that Robison Farms used for collateral in its arrangement with AgriCap, and that they therefore had a superior interest in the accounts receivable and proceeds held by AgriCap.
AgriCap claimed that it purchased Robison Farms' accounts receivable under a traditional factoring agreement and that it therefore held no assets of Robison Farms that were subject to a PACA trust. It also asserted as a defense that it was a bona fide purchaser for value.
The district court rejected AgriCap's position and found that AgriCap's arrangement with Robison [*3] Farms was a lending arrangement secured by Robison Farms' accounts receivable. Accordingly, it concluded that AgriCap held the accounts receivable as part of the PACA trust, the assets of which had to be used to pay unpaid commodities sellers before any other creditor.
For the reasons that follow, we affirm the district court's conclusion that Robison Farms' accounts receivable were held by AgriCap as collateral for a loan and therefore were subject to a PACA trust, but we disagree with the amount that the district court required AgriCap to pay the commodities sellers. Accordingly, we affirm in part, vacate in part, and remand for a reassessment of damages in accordance with this opinion.
United Rentals v. Angell, 592 F.3d 525 (4th Cir. Va. 2010)
United Rentals, Inc. ("United") appeals a district court order affirming a bankruptcy court judgment allowing the bankruptcy trustee to avoid and recover certain payments made to United during the 90 days prior to the bankruptcy petition. We affirm.
Our holding today is limited to the conclusion that United did not establish the § 547(c)(1) defense beyond the amounts determined by the bankruptcy court at the summary judgment stage. This holding makes perfect sense when viewed in the context of § 547(c)(1)'s purpose, to accommodate the need of financially unsteady companies to use checks to pay for new transactions. See In re Lazarus, 478 F.3d at 18; In re Smith's Home Furnishings, Inc., 265 F.3d at 965 n.4. The facts of this case, wherein the transfers were not made substantially contemporaneously with United's supplying of the equipment and parts that generated the debt, present a completely different scenario.
In Re: Jones, Debtor, 591 F.3d 308 (4th Cir. W. Va. 2010)
In his Chapter 7 proceeding, the debtor filed a statement of intention to continue payments on a vehicle purchased from the creditor but did not state whether he intended to redeem the vehicle or reaffirm the debt as required by §§ 362(h) and 521(a)(2). The district court held that the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub. L. No. 109-8, 119 Stat. 23, eliminated the ride-through option and that § 46A-2-106 was inapplicable. On review, the court affirmed, agreeing that the ride-through option was eliminated as applied to the present facts. When the debtor failed to timely redeem the vehicle or reaffirm the contract, the automatic stay was terminated and the creditor was free to take whatever action was permitted under the contract and West Virginia law. Further, the "ipso facto" clause could be enforced under § 521(d) when the debtor failed to comply with §§ 362(h) and 521(a)(2). Therefore, the filing of the bankruptcy petition constituted default under the agreement. Finally, the creditor was not required to give appellants notice of default and the right to cure under § 46A-2-106 because there was no ability to cure.
U.S. District Court Eastern District of Virginia
Ryan, Inc. v. Circuit City Stores, Inc., 2010 U.S. Dist. LEXIS 120627 (E.D. Va. Nov. 15, 2010)
This matter is before the Court on appeal from three Orders of the United States Bankruptcy Court for the Eastern District of Virginia ("Bankruptcy Court"). Specifically, Ryan, Inc. f/k/a Ryan & Company, Inc. ("Ryan") challenges the Bankruptcy Court's Orders denying Ryan's motion to compel Circuit City Stores, Inc. Click for Enhanced Coverage Linking Searches("Debtors") to assume an executory contract; authorizing Debtors' rejection of that contract; and denying Ryan's verified motion to reconsider those two orders.
Ingram Micro, Inc. v. ABC Mgmt. Tech. Solutions, LLC, 2010 U.S. Dist. LEXIS 103217 (E.D. Va. Sept. 29, 2010)
MEMORANDUM OPINION
At issue on cross motions for summary judgment in this diversity breach of guaranty ease is whether defendant Ali Beheshtin is liable for the debts ABC Management Technology Solutions, LLC ("ABC") owes to Ingram Micro Inc. based on the language of a personal guaranty signed by Beheshtin. Beheshtin argues that he is not liable for such debts because, inter alia, the amount of ABC's debt exceeds the maximum amount of debt contemplated by the relevant financial agreements.
For the reasons that follow, Beheshtin's various arguments to avoid liability under the guaranty fail.
First Am. Title Ins. Co. v. First Alliance Title, Inc., 718 F. Supp. 2d 669 (E.D. Va. 2010)
Excerpt from Memorandum Opinion
This matter comes before the Court on First American Title Insurance Company and Western Surety Company's cross Motions for Summary Judgment (Dkt. nos. 44 and 52). After hearing oral arguments on the Motions on January 15, 2010, the Court entered an Order (Dkt. no 68) extending the discovery window in this case and permitting the parties to thereafter file briefs supplementing their original cross Motions for Summary Judgment. The parties have now submitted those briefs and this matter is ripe for disposition.
For the reasons that follow, the Court GRANTS First American Title Insurance Company's Motion for Summary Judgment (Dkt. no 44) and DENIES Western Surety Company's Motion for Summary Judgment (Dkt. no. 52).
Bluemark, Inc. v. Geeks on Call Holdings, Inc., 2009 U.S. Dist. LEXIS 121984 (E.D. Va. Nov. 18, 2009)
Plaintiff, Bluemark, Inc. ("Bluemark"), brings this breach of contract, fraud and Racketeer Influenced and Corrupt Organizations Act ("RICO") action against Defendants, Geeks on Call Holdings, Inc. ("GOCH"), Geeks on Call America, Inc. ("GOCA"), Richard T. Cole, Richard Artese, and Keith Wesp (collectively "Defendants"), alleging misrepresentations and violations related to the franchise agreement between Bluemark and GOCH.
U.S. District Court Western District of Virginia
Minor Family Hotels, LLC v. Specialty Fin. Group, LLC (In re Minor Family Hotels, LLC), 2010 U.S. Dist. LEXIS 131060 (W.D. Va. Dec. 10, 2010)
MEMORANDUM OPINION
This matter is before the Court upon consideration of an appeal filed by debtor and defendant Minor Family Hotels, LLC ("Debtor") and Halsey Minor (collectively "Owners") from an order of [*2] the United States Bankruptcy Court of the Western District of Virginia, Lynchburg Division ("Bankruptcy Court") entered on October 1, 2010, remanding Specialty Finance Group, LLC v. Minor Family Hotels, LLC, Adv. No. 10-06112 ("Georgia Action") to the State Court of Fulton County, Georgia ("Georgia State Court"). Oral argument and decision in this matter have been expedited as requested by Owners in their Emergency Motion (docket no. 18) in order to avoid delaying the Georgia State Court's hearing on pending motions for summary judgment scheduled for December 14, 2010. For the reasons stated below, I affirm the Bankruptcy Court's remand order.
Summit Community Bank v. Blue Ridge Shadows Hotel & Conf. Center, 2009 U.S. Dist. LEXIS 32157 (W.D. Va. 2010)
MEMORANDUM OPINION
This case is presently before the court on an appeal from an order of the United States Bankruptcy Court for the Western District of Virginia dated November 30, 2009. The appellant seeks review of the bankruptcy court's order holding that certain materials furnished to a hotel were improvements and thus properly claimed in a mechanics' lien under Virginia Code § 43-3. Because the court concludes that the materials at issue were not improvements under the statute, the order will be reversed.
In re Accelerated Recovery Sys., 2010 U.S. Dist. LEXIS 21498 (W.D. Va. 2010)
MEMORANDUM OPINION
These consolidated bankruptcy appeals present the following questions regarding appellants 1 claims under the Fair Debt Collection Practices Act ("FDCPA"), [*2] 15 U.S.C. § 1692, et seq.:
- Did the Bankruptcy Court err by finding that [a debt collection letter from appellee to appellant] did not violate 15 U.S.C. § 1692e(7) by falsely representing or implying that the consumer committed a crime or other conduct in order to disgrace the consumer?
- Did the Bankruptcy Court err by finding that [debt collection letters from appellee to appellants] did not violate 15 U.S.C. § 1692g(a)(3) by failing to give [appellants] 30 days from the date of the receipt of the original communication from [appellee] to dispute the debt owed due to the bona fide error defense?
- Did the Bankruptcy Court err by finding that the only damages asserted by [appellants] were [their] attorney fees?
U.S. Bankruptcy Courts
Gordon Props., LLC v. First Owners' Ass'n of Forty Six Hundred Condo. (In re Gordon Props., LLC), 2011 Bankr. LEXIS 2863 (Bankr. E.D. Va. July 21, 2011)
In re: TIDEWATER MARINA HOLDING, L.C., 2011 Bankr LEXIS 37 (Bankr. E.D. Va. 2011)
The debtor entered into a contract with Equity Homes, LLC, the Fittons' predecessors, to sell to Equity Homes about 340-acres of land including a marina. The debtor agreed to complete an expansion of the marina before closing and Equity Homes agreed to loan the debtor $5,575,000 for the construction costs. Both parties now assert that the other breached the contract, the Fittons asserting that the debtor did not complete the marina improvements before the expiration of the Army Corps of Engineers permit and the debtor that Equity Homes failed, among other matters, to timely make an advanced payment. The motion for summary judgment raises several issues.
In re: GORDON PROPERTIES, LLC, 2010 Bankr. LEXIS 1777 (Bankr. E.D. Va. 2010)
MEMORANDUM OPINION
This case is before the court on Gordon Properties, LLC's Motion for a Preliminary Injunction to Enforce Automatic Stay and First Owners' Association of Forty Six Hundred Condominium, Inc.'s opposition. The debtor asserts that the unit owners association denied it the right to vote at the October 7, 2009 annual meeting in violation of the automatic stay, 11 U.S.C. §362(a), and requests that the annual meeting which was adjourned sine die be reconvened. The court will deny the motion. While the actions of which the debtor complains were an abuse of power, they were not an effort to collect a pre-petition debt.
In Re: Qimonda, 2010 Bankr. LEXIS 472 (Bankr. E.D. Va. 2010)
MEMORANDUM OPINION
The question presented is whether the automatic stay is applicable to an action pending before the International Trade Commission. The ITC argues that the action is an enforcement of its police or regulatory power and is excluded from the automatic stay. 1 11 U.S.C. § 362(b)(4).
1 Section 362(b)(4) excludes only acts under subsection 1, 2, 3 and 6 of § 362(a). Acts by governmental units covered under subsections 4, 5, 7 and 8 are stayed.
IN RE: CIRCUIT CITY STORES, INC., 2010 Bankr. LEXIS 44 (Bankr. E.D. 2010)
MEMORANDUM OPINION
The issue now before the Court in this Chapter 11 case is whether the Debtors may use § 502(d) of the Bankruptcy Code to temporarily disallow certain § 503(b)(9) 1 claims filed by a number of their creditors (the "Claimants"). The Debtors seek to have the claims filed by the Claimants temporarily disallowed up to the amount potentially recoverable on account of preferential transfers allegedly avoidable under § 547 (the "Preferential Transfers). Hearing was conducted on November 12, 2009 (the "Hearing") to consider Debtors' request for ruling on the threshold issue of whether § 502(d) can be used to temporarily disallow § 503(b)(9) claims.
In re Clements, 421 B.R. 755; 2010 Bankr. LEXIS 26 (Bankr. W.D. Va. 2010)
Decision and Order
It has long been recognized that HN3§ 1322(b)(2) prohibits a Chapter 13 debtor from modifying in any way the terms of an undersecured claim if that claim's only security is the debtor's principal residence. See Nobelman v. American Savings Bank, 508 U.S. 324, 332, 113 S. Ct. 2106, 124 L. Ed. 2d 228 (1993). 3 Witt v. United Companies Lending Corp. (In re Witt), 113 F.3d. 508, 513 n. 5 (4th Cir. 1997) [*6] states "that by enacting § 1322(c)(2), Congress intended to create a limited set of exceptions to § 1322(b)(2)." While Witt recognized that § 1322(c)(2) was an exception to the anti-modification provision found in § 1322(b)(2), the Fourth Circuit, in denying confirmation for a plan nearly identical in substance to the Debtors' latest Chapter 13 plan, held that "§ 1322(c)(2) does not permit the bifurcation of an undersecured loan into secured and unsecured claims if the only security for the loan is a lien on the debtor's principal residence." Id. at 513-514. Pursuant to Witt, the Court holds that the Debtors' proposed bifurcation of the Rutherfords' Claim, as stated in their latest Chapter 13 plan, is not permissible and the plan cannot be confirmed. 4
....the Rutherfords' Objection to Confirmation is hereby SUSTAINED and confirmation of the Amended Chapter 13 Plan dated November 12, 2009, is DENIED.
In re: Bermuda Bay, L.L.C. and ABKDH, LLC, Debtors-in-possession, 2009 Bankr LEXIS 4215 (Bankr. E.D. 2009) - MEMORANDUM OPINION AND ORDER
On December 23, 2009, the court held a hearing to consider approval of debtors' disclosure statement filed on November 3, 2009, in these jointly administered bankruptcy cases. 1 The main objective of the hearing was to allow the parties to present their arguments to the court in light of the December 16, 2009, objection to the disclosure statement filed by creditor Wachovia Bank, National Association.
IN RE: BROOKLAND PARK PLAZA, LLC, 2009 Bankr. LEXIS 3241 (Bankr. E.D. Va. 2009) - MEMORANDUM OPINION
Wachovia Bank, National Association ("Wachovia") brought this adversary proceeding against Basheva Dresdner and Yehuda Gutman (the "Defendants") to collect on a defaulted loan made by Wachovia to Brookland Park Plaza, LLC (the "Debtor"). The loan was guaranteed by the Defendants. Before the Court is a motion by Wachovia for summary judgment. There are no disputed facts relating to Wachovia's prima facie case. In response to the motion for summary judgment, the Defendants have raised the affirmative defense of equitable estoppel. The Defendants allege that Wachovia breached certain oral agreements that it made with them, which agreements induced the Defendants to sign the guaranty agreements. The question for the Court is whether Defendants' allegations, which for purposes of this motion for summary judgment must be accepted by the Court as true, create a genuine issue of material fact that would preclude entry of summary judgment on Wachovia's prima facie case at this time. Wachovia contends that Defendants' allegations do not raise a genuine issue of material fact because any such oral representations or agreements are barred as a matter of law under both the statute of frauds and the parol evidence rule. The Court holds that the statute of frauds is inapplicable in this case, but given the application of the parol evidence rule, as discussed below, Wachovia is entitled to the entry of summary judgment against the Defendants.
In re: ON-SITE SOURCING, INC, 2009 Bankr. LEXIS 1698 (Bankr. E.D. Va. 2009) - MEMORANDUM OPINION
The issue before the court is the extent to which a chapter 11 debtor may substitute a §363 sale for a chapter 11 plan. The debtor reached too far in this case. While the sale will be approved, those portions that are a substitute for a chapter 11 plan will be excised. This memorandum opinion supplements the oral ruling of the court disallowing the proposed unsecured creditors trust. In order to fully appreciate the §363 sale proposal, it is necessary examine the debtor's pre-petition sales efforts, the debtor's pre-petition debt structure and the debtor-in-possession's post-petition financing.
IN RE: CIRCUIT CITY STORES, INC., et al., Debtors., 2009 Bankr. LEXIS 237 (Bankr. E.D. Va. 2009)
The Court finds that the Debtors complied with § 366 of the Bankruptcy Code by proposing a means to provide an amount of adequate assurance in a motion filed at the start of the case. The Court concludes that it has the authority to enter a scheduling order setting forth an objection deadline and hearing date that allows for any dispute to be resolved prior to the 30-day deadline set forth in § 366(c)(2). As long as the Debtors provide the adequate assurance ordered by the Court by the thirtieth day, the Debtors will have complied with § 366 and the utility companies may not discontinue service. Under such circumstances it is appropriate for the Court to extend the injunction against disruption of utility service set forth in § 366(a) of the Bankruptcy Code beyond the thirtieth day after the Petition Date. See In re Syroco, Inc., 374 B.R. 60 (Bankr. D.P.R. 2007) ("A contrary interpretation would make it impossible for the [debtor] to satisfy Section 366 prior to the termination of the injunction period, when a utility company maintains silence."). The Procedures set forth in the Utility Order serve to streamline the reorganization process and do not adversely impair the rights of any utility company. The Utility Order is designed to avoid a haphazard and chaotic process whereby each utility could make extortionate, last-minute demands for adequate assurance which the Debtors would be pressured to pay under the threat of losing critical utility service.
Virginia Supreme Court
Cappo Management V, Inc. v. Britt 06/09/2011 Article Nine of the UCC as adopted in Virginia, Code §§ 8.9A-101 et seq., governs secured transactions, including a consumer's purchase of a car from a dealership under a retail installment sales contract and related documents. When a consumer trades in an old car, makes a down payment towards the purchase of a new car, and assumes an obligation to pay monthly installments until the full purchase price of the new car is satisfied, the consumer becomes a "debtor" under Code § 8.9A-102(a)(28)(A) and is entitled to the protections afforded under Article Nine. Thus, the circuit court did not err in its judgment that a dealership's repossession of a car previously sold to a consumer was governed by Article Nine and that the dealership failed to provide the consumer with the required notice of disposition of the car required by Article Nine. The judgment is affirmed.
